Transaction in the parking lot of a South Bay steakhouse under federal scrutiny

Previously

The cash was handed over in the front seat of the superintendent’s Mercedes-Benz, a black sedan parked outside a South Bay steakhouse in the weeks before the 2010 election.

By his own account in a sworn deposition, San Ysidro schools Superintendent Manuel Paul took the money, about $2,500, from a local builder who was on the hunt for a seven- or eight-figure construction contract.

Paul maintains the money was a campaign contribution and says he drove straight to a Tijuana print shop to buy signs to help a school board member get re-elected.

“It was cash given to me by Mr. Loreto Romero,” Paul said in a June deposition obtained by The Watchdog. “He gave me cash for campaign posters for Mrs. Yolanda Hernandez.”

The FBI has been asking questions about the transaction, three sources told The Watchdog. And a federal grand jury is now hearing testimony from witnesses.

The handoff could be problematic in many ways. State law does not permit campaign contributions of $100 or more to be given in cash. And Paul acknowledged in the deposition that he got no receipt when he purchased the signs.

Weeks after Paul’s sworn testimony on June 20, Hernandez and two other candidates amended their campaign filings to reflect $1,897 in previously unreported donations from Romero.

An accompanying receipt from the Studio K printer in Tijuana is valued at $1,401, and dated months before Paul says he met with Romero. The receipt is made out to Gareth Maden, the husband of Trustee Raquel Marquez.

“All the money was used to pay for posters,” Paul said in the deposition.

Paul, who gave his testimony as part of a breach-of-contract lawsuit filed against the district, did not respond to multiple messages left with him and his attorney Thursday and Friday.

Romero declined to discuss the cash, citing the ongoing investigation. Hernandez did not respond to questions about the claim.

The Watchdog obtained copies of two Paul depositions, one taken in June and the other on Aug. 31.

The second deposition returned to the $2,500 cash transaction in the parking lot of The Butcher Shop, now known as The Steak House on Broadway. Attorneys sought further explanation from Paul about the event.

The interview was terminated after less than an hour by school district attorney Daniel Shinoff, who objected to questions about meetings Paul held to review circumstances of the contribution with others.

An FBI spokesman said he could not confirm or deny the investigation.

Document

Weeks after Paul’s deposition in June, school board members Hernandez, Jean Romero and Jason Michael-Bradley Wells amended their October 2010 campaign disclosures to reflect donations from Loreto Romero (unrelated to Jean).

The changes to state disclosure forms could be problematic for the three trustees because the original filings were signed under penalty of perjury.

The two Paul depositions were conducted by San Diego lawyer Patrick Prindle, who filed a breach-of-contract case against the San Ysidro School District earlier this year.

The suit claims the district reneged on an agreement with Manzana Energy to install solar equipment at San Ysidro campuses after company executive Arturo Castanares refused to buy a home for Marquez-Maden and her husband.

“When Mr. Castanares refused, Gareth Maden threatened Mr. Castanares that he would regret refusing to participate in the illegal scheme involving the purchase of a house,” the complaint states.

Marquez did not respond to requests for an interview.

Prindle, who is seeking $18 million in damages, said he was not surprised to learn that federal agents are investigating school district officials.

“My clients and I stand by the statements included in various pleadings filed with the Superior Court,” Prindle said. “We will continue to vigorously prosecute this lawsuit and we are confident that our position will be vindicated when this matter is ultimately presented to a jury next year.”

Some of the players in San Ysidro have connections to the Sweetwater Union High School District, where two current and two former officials are facing felony charges of accepting bribes in the form of meals and gifts from contractors. They have pleaded not guilty.

Paul and his wife, for instance, are listed in court documents as guests at a $1,700 meal at Morton’s steakhouse in July 2008 hosted by contractor Henry Amigable.

Other guests included Hernandez and three of those facing charges in Sweetwater — former Superintendent Jesus Gandara, former board member Greg Sandoval and current trustee Pearl Quiñones.

Amigable pleaded guilty to a misdemeanor in May and is cooperating with county prosecutors.

The San Ysidro School District educates more than 5,500 children from kindergarten through eighth grade.

The district has an annual budget of about $33 million and is now managing $250 million worth of voter-approved bonds to pay for new and improved facilities.

In addition to the cash transaction, reported by NBC 7/39 in August, district officials have also been criticized in recent months for nepotism in hiring practices and failing to disclose critical information to bond investors.

In May, The Watchdog reported that Paul’s son and daughter both worked for the district, along with the son of Assistant Superintendent Gloria Madera.

Also, one board member’s son is the top human resources official and several principals and other department heads have added their in-laws and grandchildren to the San Ysidro payroll, The Watchdog reported.

Earlier this year, a New York bond-rating agency warned investors that it was reconsidering A and A-plus grades it awarded to separate San Ysidro School District proposed bond issuances.

The negative rating watch was issued in May by Fitch Ratings after The Watchdog asked why the $18 million breach-of-contract suit filed one month earlier was not included in the bond analyses.

Fitch requested and received additional information from the district. In July, the agency reaffirmed it’s A and A-plus grades for the bonds.

You should know

San Ysidro Superintendent Manuel Paul was one of six superintendents countywide to get a raise of 10 percent or more since 2010. He makes $181,920 base annual salary.